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Price & Time: USD/NOK Turns Right on Schedule - Now What?

This publication attempts to further explore the concept that mass movements of human psychology, as represented by the financial markets, are subject to the mathematical laws of nature and through the use of various geometric, arithmetic, statistical and cyclical techniques a better understanding of markets and their corresponding movements can be achieved.

-EUR/USD has consolidated above the 1.2880/95 Gann/Fibonacci zone over the past few days following several probes below this key support at the start of the week

- While the exchange rate remains below important Gann and retracement resistance in the 1.3000/20 area our bias remains lower

- Cyclical studies are opposing at the moment with medium-term ones negative into next month while short-term studies look positive for a few more days

- The 1.2880 level remains an important pivot on the downside

-Weakness below signals a downside resumption

Strategy: Recent action has been painful. Took a 30 pip loss selling the break of 1.2880 at the start of the week. As we have noted a counter-trend move developing from test of key support wouldn’t surprise but strength has been lacking. Want to see how the euro reacts around 1.3020. Will look to begin operating on the long side if it can muster any real strength above.

- NZD/USD has moved aggressively higher over the past few days and overcame key retracement resistance in the .8300 area

- Our bias remains higher in the Kiwi, but strength over a convergence of square root progressions related to the year-to-date range in the .8340/45 area needed to trigger the next extension

- Some minor turn windows seen around the middle of the week and the start of next week

- Retracements in the .8300 area are now immediate support

- However, only weakness under a Gann square convergence in the .8255 area turn us negative on the Bird

Strategy: We were a bit unlucky. Got stopped out at cost in our long position in the volatility surrounding the GDP figures. Looking now to buy on a dip at .8275 with a stop just under .8245.

Focus Chart of the Day: USD/NOK

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As we noted on Wednesday, we have been on the lookout for a turn in USD/NOK. A convergence of several cyclical studies (most notably a clear Fibonacci bar count sequence since the start of the year) pointed to a down move of some sort commencing. With Thursday’s narrow range bar and subsequent weakness coming right during our three day turn window the action is precisely what we wanted to see. We got short on a break of Thursday’s low with a stop over the 5.8575 high. The short-term cyclical picture looks negative for at least a few more days. Will look to take off half ahead of retracement support in the 5.7820 area and move our stop to cost if it is seen. There is a chance this move could also turn into a more important decline. Stay tuned.

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com